Commentator:
Steven A. Wechsler
President and CEO
National Association of Real Estate Investment Trusts
Washington, DC

Responses to GlobeSt.com's first Feedback Poll raised some interesting thoughts on the future of a common global REIT structure, with 52% of polltakers betting on a five-year wait before a common trust structure exists. (The second most popular choice was Never, at 22%. But among the optimists, 10% of respondents said one year and 13% opted for 10 years.) Now Wechsler comments on his view of the issue:

"Respondents to your poll seem to have it about right--the five-to-10-year timeframe--before we have a global REIT product. It's a very reasonable goal and an increasingly reasonable expectation that we will find ourselves eventually with a standard.

"The US has a long-established set of REIT rules and a long-established REIT community. Australia has also had a lengthy, successful experience with REITs, and we're seeing major European and Asian countries adopt REIT rules. It's instructive to note that France adopted rules that are comparable to the US regime, the UK is about to approve rules much like the US or French approach, and Germany is not far behind.

"The activity in the UK makes it more likely that the German REIT will look more like the UK structure than not. One informs the other. There's no question that German authorities are looking very closely at the UK model--there are two currently under review. Given that, it's only a matter of time before countries like Spain and Italy move in the same direction. Within these countries there will be a growing understating of REITs, and that understanding will redound to the benefit of REITs in other countries.

"In Asia, Japan adopted rules that look and feel a lot like the pre-1990s US regime, but they'll evolve. We've seen significant development in Singapore and Hong Kong, and there's growing interest in China and India. I expect to see those structures move forward as well. And, as in Europe, the Hong Kong REIT will help lead the way elsewhere.

"But there are still issues before we see a global standard. The US has bilateral tax treaties with countries like the UK that will provide for reasonable treatment, for instance, of residents in one country investing in the other. That's to the good, but there's more that can be done. The major step would be reciprocity--and we are several years away from that--wherein the UK government recognizes US REITs when they invest in the UK and visa versa. That doesn't exist today, but discussions are beginning in the Organization for Economic Development and Cooperation, and we're participating.

"With all of these processes as well as growing investor interest in cross-border investments, we have enough moving parts to indicate that some years down the road we will be getting closer to an accepted and better-understood REIT model."

Instant Insights /

The Global REIT Outlook

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